Rate-Cut Expectations Hold Firm; S&P 500 and Nasdaq Extend a Narrow Three-Day Winning Streak

Market Overview

U.S. labor data released yesterday failed to shake expectations for a rate cut later this month. However, ahead of the highly anticipated PCE inflation report, market sentiment turned cautious, trimming earlier gains. The S&P 500 and Nasdaq narrowly secured their third straight advance, with the S&P hitting a six-week high, while the Dow pulled back from a three-week peak.

On the corporate front, Meta climbed over 3%, Nvidia rebounded more than 2%, and Salesforce jumped nearly 4% on upbeat guidance. Chinese ADRs reversed earlier losses, with Nio surging more than 4%.

In macro and FX markets, Treasury yields accelerated higher intraday following the jobless data release. The U.S. Dollar Index rebounded after touching a one-month low. The Japanese yen strengthened to a more than two-week high as expectations grew for a Bank of Japan rate hike this month, while the offshore yuan slipped back below the 7.07 level.

Elsewhere, Bitcoin saw sharp volatility—briefly breaking above $94,000 for the first time in two weeks before dropping over 3%. Crude oil notched a second straight gain to a two-week high amid stalled Russia-Ukraine peace talks. Gold posted a modest two-day rebound, while LME copper retreated from its recent record high.

Hot Topics to Watch● U.S. Challenger Job Cuts: 71,000 Announced in November

Layoffs in technology, telecommunications, and retail led the downturn in November. AI-related job cuts continued to rise, totaling 55,000 in the first 11 months of the year. Overall, Challenger-tracked layoff announcements reached roughly 1.171 million year-to-date—up 54% from last year.

This marks the highest annual layoff level since the pandemic in 2020 and only the sixth time since 1993 that yearly job cuts have exceeded 1.1 million. By contrast, hiring plans totaled fewer than 500,000— the lowest level since 2010 and a 35% year-over-year decline.

● Yen Strengthens Against the U.S. Dollar

Markets increasingly expect the Bank of Japan to raise its policy rate from 0.5% to 0.75%, which would mark the first hike since January. The government signaled, “If the BoJ wishes to raise rates this month, it may do so at its discretion,” widely interpreted as a green light for policy tightening.

The yen traded near 155.37 per dollar as investor focus shifts from “Will the BoJ hike？” to “How much further could it tighten？”

Key Events to Watch (GMT+8)

23:00 (US Time)

U.S. Core PCE Price Index (YoY/MoM) — September

U.S. December Inflation Expectations (Preliminary)

U.S. Personal Spending (MoM) — September

University of Michigan Consumer Sentiment Index (Preliminary) — December